The Justice Department is expected to oust the head of the Bureau of Alcohol, Tobacco, Firearms and Explosives, according to people familiar with the matter, amid a troubled federal antitrafficking operation that has grown into the agency's biggest scandal in nearly two decades.

Moves toward the replacement of Kenneth Melson, acting ATF director since April 2009, could begin next week, although the precise sequence of events remains to be decided, these people said.

The shakeup shows the extent of the political damage caused by the gun-trafficking operation called Fast and Furious, which used tactics that allowed suspected smugglers to buy large numbers of firearms. Growing controversy over the program has paralyzed a long-beleaguered agency buffeted by partisan battles. The ATF has been without a Senate-confirmed director since 2006, with both the Bush and Obama administrations unable to overcome opposition from gun-rights groups to win approval of nominees.

In November, President Barack Obama nominated Andrew Traver, the head of the ATF's Chicago office, as permanent ATF director. The nomination stalled in the Senate after the National Rifle Association said Mr. Traver had a "demonstrated hostility" to the rights of gun owners.

Mr. Traver is set to travel to Washington on Tuesday to meet with Attorney General Eric Holder and Deputy Attorney General James Cole, the people said. The administration is weighing whether to name Mr. Traver as acting director or choose another interim chief while awaiting Senate action on his nomination, they said.

ATF spokesman Scot Thomasson said: "Acting Director Kenneth Melson continues to be focused on leading ATF in its efforts to reduce violent crime and to stem the flow of firearms to criminals and criminal organizations. We are not going to comment on any speculations."

Mr. Melson is the most senior official so far implicated in a congressional probe of the Fast and Furious operation. The ATF Phoenix office ran the program in 2009-2010 to monitor weapons purchases by suspected gun smugglers. Agency officials hoped eventually to build a case against major arms smugglers serving Mexican drug cartels. The ATF has struggled to stanch the flow of U.S. weapons to Mexican drug gangs.

At a House hearing this week, Rep. Darrell Issa (R., Calif.), chairman of the Oversight and Government Reform Committee, disclosed internal documents showing that Mr. Melson was closely involved in managing Fast and Furious operation. One email among ATF officials described Mr. Melson's request for an Internet link to hidden cameras the ATF had planted in gun shops cooperating with the operation, Mr. Issa said, citing the documents. That allowed Mr. Melson to watch a live feed of suspected "straw buyers," who purchase firearms on behalf of others, buying AK-47-style rifles, he said.

Mr. Issa and Sen. Chuck Grassley (R., Iowa) are leading the congressional probe of Fast and Furious, which came to light after an Arizona shootout in December that killed a U.S. border agent. Two assault weapons bought in a gun shop that was part of the operation were found at the scene. The shooter and the gun used to kill the agent haven't been identified. A Mexican national is charged in the shootout.

Republican lawmakers say the agency was "reckless" in running the program and should have known that at least some of the thousands of weapons would end up in Mexico or be used in crimes in the U.S.

The office of the Justice Department's inspector general is investigating the matter.

Fast and Furious has grown into the agency's worst crisis since the ATF's 1993 raid on a religious sect in Waco, Texas, which triggered a gunbattle that killed four ATF agents. The fallout from the raid and subsequent government assault on the sect's compound led to years of recriminations and investigations of the ATF.

The Fast and Furious operation caused dissent in the ATF Phoenix office, according to three ATF agents who testified at a House hearing Wednesday. The agents said they battled supervisors who insisted on doing surveillance instead of arresting suspected straw buyers.

Despite the Justice Department's internal probe, the hearing helped cement the view among top Justice Department officials that Mr. Melson needed to be moved out before pressure from lawmakers grew more intense, according to the people familiar with the matter.

Ronald Weich, assistant attorney general for legislative affairs, testified at this week's hearing but gave few details of the program. Mr. Weich said that if the investigation found "flawed strategies" or "insufficient surveillance of weapons," the responsible officials would be held to account.

The ATF is at the forefront of the government's efforts to stem the flow of what both the U.S. and Mexican governments say is a flood of U.S. arms to Mexican cartels. ATF agents say stopping that flow is often complicated by gun-owning traditions, particularly in border states, and laws that make it difficult to prosecute illegal weapons sales.

Gun-rights groups, which dispute that the U.S. is a major source of firearms trafficked to Mexico, have criticized ATF attempts to increase regulation of gun purchases. At the same time, the Obama administration has been under pressure from big-city mayors and others who favor tighter restrictions.

In a 2010 audit, the Justice Department inspector general criticized the ATF for pursuing too many small-buyer cases and not using its resources to find major gun traffickers.

It's unclear how the current controversy will affect the administration's chances of winning Senate confirmation for Mr. Traver. Mr. Traver is a 24-year ATF veteran investigator and former Navy officer. As the head of the ATF office in Chicago, he made a priority of pursuing gang cases. In particular, he focused on pursuing street gangs that had spread from urban areas into the suburbs, according to people who have worked with him.

Some ATF agents believe the scandal could help highlight how Congress's refusal to approve an ATF leader contributes to the agency's troubles.

White House spokesman Jay Carney, in response to questions Friday, said, "I can tell you that, as the president has already said, he did not know about or authorize this operation."

Write to Evan Perez at evan.perez@wsj.com and Devlin Barrett at devlin.barrett@wsj.com

Project Gunrunner:
Gun trafficking to Mexico is a nationwide problem with consequences on both sides of the border. In response, ATF implemented Project Gunrunner in 2006 as a comprehensive strategy to reduce firearms and explosives related violent crime associated with Mexican criminal organizations operating in the U.S. and Mexico by preventing these organizations from unlawfully acquiring and trafficking firearms and explosives. Through Project Gunrunner, ATF works in conjunction with its domestic and international law enforcement partners to identify, disrupt, and dismantle the firearms and explosives trafficking infrastructure of criminal organizations operating in Mexico, along the border, and other areas of the U.S.

Project Gunrunner’s objective is to deny Mexican drug cartels the tools of the trade, which they employ to murder rival drug traffickers, civilians, as well as political, military, and law enforcement figures in order to strengthen their grip on the lucrative drug and firearms routes into and out of the United States.

The cornerstone of Project Gunrunner is intelligence-led firearms trafficking investigations. This process involves the collection of information from a variety of sources such as Federal Firearms Licensees, ballistic and forensic analysis, and data derived from firearms tracing in addition to traditional intelligence sources and methods. This information is then synthesized, analyzed and appropriate leads are disseminated to ATF field offices for investigative action. The information is also shared with our Federal, State, local and tribal partners, as well as our Mexican law enforcement counterparts, each contributing their unique capabilities and resources, forming a multi-layered, comprehensive approach to disrupting firearms trafficking and drug-related violence.

Project Gunrunner investigations have resulted in the identification and prosecution of firearms trafficking organizations in all parts of the United States, from Minnesota to Florida to all our border states, where ATF criminal intelligence and tracing data has provided valuable leads used in identifying individuals and organizations providing firearms to Mexican criminal enterprises.

In 2009, ATF established several new offices dedicated to Project Gunrunner firearms trafficking investigations in McAllen, Texas, El Centro, California, and Las Cruces, New Mexico, including a satellite office in Roswell, New Mexico, in addition to new Gunrunner teams in Tucson, Arizona and El Paso, Texas. In September 2010, ATF announced plans to expand Project Gunrunner by opening additional Gunrunner offices in Sierra Vista, Arizona, and Brownsville, Texas. Additional expansion plans include the opening of three new offices located in U.S. Consulates in Mexico, as well as adding additional investigative and analytical staff to the ATF Country Office in Mexico City. These steps will allow for more timely and effective collaboration among the various law enforcement partners dedicated to Project Gunrunner.

Today, there are nearly 4,500 active Project Gunrunner investigations throughout the United States. Since its inception in 2006, and through Fiscal Year 2010, ATF’s Project Gunrunner has recommended over 1,100 criminal cases and in excess of 2,500 defendants for prosecution. To date, Project Gunrunner investigations have resulted in the seizure of over 10,000 firearms and nearly one million rounds of ammunition destined for Mexico.

He got his order direct from Eric Holder and anyone thinks anything else is full of shit. At that level nothing happens without the consent of the higest offical in the judicial system. Thats Eric and Your president.Melson is the goat. Wise up. This has been reported for the last year and no one seem to give a damn. It was laughed off by the common people. It getting so when the commone person sneezes all he blows is sand. Wild Bill

ATF Chief to Resign Over Mexican Guns Controversy
ShareretweetEmailPrintElspeth Reeve Elspeth Reeve – Mon Jun 20, 2:21 pm ET
Kenneth Melson is expected to resign as acting director of the Bureau of Alcohol, Tobacco, Firearms, and Explosives in the next day or two with the agency facing scrutiny over the controversial "Fast and Furious" anti-gun trafficking operation that cost the life of a border agent, CNN's Terry Frieden reports. Melson has led the ATF since April 2009, and might be replaced by Andrew Traver, who leads the agency's field office in Chicago. Melson was "closely involved with managing" the operation.

The ATF allowed Mexican drug cartels to buy large numbers of weapons during the operation, which took place in 2009 and 2010, so it could keep tabs on gun smugglers with the hope of building a case against them. But the operation went wrong, as The Wall Street Journal's Evan Perez and Devlin Barrett report, and Republican lawmakers have been harshly critical of it:

Mr. Issa and Sen. Chuck Grassley (R., Iowa) are leading the congressional probe of Fast and Furious, which came to light after an Arizona shootout in December that killed a U.S. border agent. Two assault weapons bought in a gun shop that was part of the operation were found at the scene. The shooter and the gun used to kill the agent haven't been identified. A Mexican national is charged in the shootout.

The Journal notes that the agency "has been without a Senate-confirmed director since 2006, with both the Bush and Obama administrations unable to overcome opposition from gun-rights groups to win approval of nominees." Traver was nominated in November by President Obama to be the permanent ATF director, but the Senate has not confirmed him. The NRA says he's "demonstrated hostility" to gun rights.

Every gun owner should be extremely scared of these individuals, they do not respect existing laws. They lie and do whatever they think will facilitate the removal of gun ownership in America. If you don't think this goes all the way to Obama, then you are very naive. Melson will take the hit and he will be receive a presidential pardon at the appropriate time.

If there are 80 million gun owners in America, there should be 80 million phone calls and emails to your elected officials voicing your concerns about this.

Rep. Darrell Issa announced today he is not satisfied with Melson as the only person who should be held accountable. Holder should have known and if the lying half breed didn't know, then he was not doing his job. There is also a federal judge who knew what was going down.